Nov. 2 (Bloomberg) -- Bud Mayo, the cinema executive who
led small exhibitors into digital and 3-D, said he’s interested
in buying Cablevision Systems Corp.’s Clearview theaters, which
would quadruple his screens and plant a flag in New York.

Mayo’s Digital Cinema Destinations Corp. views Clearview,
which was put up for sale in May, as one of many takeover
candidates among theaters that haven’t completed the switch to
digital projection, the 18-year industry veteran said in an
interview. While buying all of Clearview’s 230-plus screens
would require a partner, Digital Cinema could digest individual
locations on its own, he said.

The executive, who founded Clearview in 1994 and sold it to
Cablevision five years later, took Westfield, New Jersey-based
Digital Cinema public in an April IPO. He says his Digiplex
chain can prosper amid stagnant industry attendance by using
digital technology to screen live concerts, sports and art-house
films on weeknights, when occupancy falls as low as 5 percent.
The right event can generate 10 times the revenue of the most
popular films on those evenings.

“There are people who can go out to the theater during the
week and they’re not going out now,” Mayo, 71, the company’s
chairman and chief executive officer, said in the interview last
month.

Mayo declined to say if he’s in talks for Clearview or any
other group in particular. Charles Schueler, a Cablevision
spokesman, also declined to comment. The Bethpage, New York-based cable company said on a September conference call that
efforts to sell Clearview are “ongoing.”

Mayo plans to build Digital Cinema into 1,000 screens in
top U.S. markets from the 85 it now runs in nine Northeast
locations. On a September earnings call, he said he has
identified potential takeover targets with about 400 screens.

For Sale

Clearview, which operates the Ziegfeld Theater and two
others in Manhattan, has more than 230 screens in 45 location,
mostly in New York and New Jersey, ideal markets for alternative
content, Mayo said. The chain may be worth about $123 million,
the May estimate of Paul Sweeney, Bloomberg Industries’ North
American research director. That’s more than five times Digital
Cinema’s $23.2 million market value.

About a fourth of Clearview’s theaters have been upgraded
to digital projection, Mayo said. Hollywood studios plan to stop
distributing movie prints by the end of next year.

Digital Cinema’s potential targets include small “mom-and-pops” struggling with conversion. Mayo also expressed an
interest in the remaining locations of Rave Reviews Cinemas LLC,
owned by BV Investments Partners. The private-equity group
agreed on Oct. 1 to sell 16 of 21 locations to Carmike Cinemas
Inc. for $19 million plus about $100 million in assumed leases.

Chris Tofalli, outside spokesman for Boston-based BV
Investment, said the company had no comment on possible bids.

No Debt

Digital Cinema rose 0.2 percent to $5.14 at the close in
New York. The stock has declined 16 percent since the IPO, in
part because of a weak third-quarter box office, according to
John Tinker, a New York-based analyst with Maxim Group. Mayo
controls the company through Class B stock representing 67
percent of the voting power, according to regulatory filings.

The company finished its June 30 fiscal year with $2.04
million in cash and no debt. It obtained a $10 million term loan
in September and plans to finance purchases with cash and
equity, Mayo said on a Sept. 20 conference call.

Before founding Digital Cinema Destinations, Mayo ran
Cinedigm Digital Cinema Corp., a company that converted theaters
to digital projection and assisted in arranging loans to cover
the costs.

Buying Opportunities

With 80 percent of U.S. cinemas converted, major film
studios plan to stop providing film prints by the end of 2013.
The change is expected to create buying opportunities as some
owners leave the business.

Regal Entertainment Group and Carmike, the No. 1 and No. 4
U.S. chains, have said they’re seeking acquisitions. In
September, China’s Dalian Wanda Group bought the No. 2 U.S.
chain, AMC Entertainment, for $2.6 billion, or about eight times
cash flow, according to Tinker.

“That is obviously creating a lot of interest,” Tinker
said. “So there’s a ‘money in the space’ kind of thesis.”

Alternative content averages 8 percent of Digital Cinema’s
revenue, the company said in documents prepared for investors,
with the company shooting for 20 percent, according to Tinker.

Examples include a Wednesday night simulcast of “West Side
Story” on Broadway that took in $2,425 in one theater. The top-grossing film that night generated $73.36 on a separate screen.
Ticket prices can be as much as $30, Tinker said.

The extra revenue is almost all profit, said Tinker, who
recommends buying Digital Cinema stock because of the potential
for such programming and because the company owns its digital
projection equipment, keeping fees that would otherwise go to
equipment suppliers.